In Parts 1 & 2 of this series I wrote about the importance of passive income and the lessons I have learned in going from zero passive income to now earning more than enough passive income per month to pay all of my expenses.
Parts 3 & 4 will cover 12 practical ways to earn passive income. Too many times I find that people limit their passive income earning potential to the area of real estate. I believe that real estate is one of the best vehicles to earn passive income long term, however, for many people there are better choices to get them started. I say this because real estate requires a fair amount of money to make it a secure investment. While you can buy real estate with no money down, you will still need a 3-6 month reserve on hand for any problems that may arise. This is very difficult for many. But instead of waiting until you have the money to invest in real estate, why not find ways to start earning passive income now?
This is one of the most powerful forms of passive income and, of course, my favorite. Real estate rentals are an amazing form of passive income as it not only generates monthly cash flow, but you can use leverage to maximize your return and the asset appreciates over time. Add to that the tax advantage it carries and it’s hard to beat! You can also read my post 10 Reasons Why Real Estate is the Best Investment for more details on this.
These are creations of the mind: inventions, literary works, and symbols, names, images and designs used in commerce. These can include books, eBooks, training materials and how-to videos just to name a few. This is a great example of a passive income stream that can be created with little money and could pay you for years to come.
Are you the creative type who loves photography, painting, graphic design or making artistic goods? There are a million ways to sell your creations without doing much more than producing it. Stock photo websites like istockphoto.com and shutterstock.comEtsy and other websites like it allow you to create your own online store to sell your merchandise. Love making videos? Put them on YouTube. You can make money from YouTube if your video gets enough views.
Dividends are payments that corporations pay to their shareholders. If you own stock in a company, you are a shareholder. Dividends are usually paid on a quarterly basis, however, it depends on the company. Warren Buffet provides some great recommendations on what he feels are the top 5 dividend paying stock.
This is another one of my favorite streams of passive income. If you have money, there will always be someone willing to pay you to use it. Lending is a great form of passive income as it is very steady and predictable, allowing you to plan your financial strategies around the income. If you plan to lend money I would highly recommend that you consult with an attorney to draft your documents so that you are protected. I also recommend only lending if there is collateral to the loan. For example, I would prefer to lend to a piece of real estate over a business plan. If the business goes under I am left with nothing, on the other hand with the real estate if the borrower stops payment I can foreclose and sell the asset to protect my interest.
Some will not categorize business income as passive, however that is because they are operating from the mindset of working in their business versus owning their business. And trust me, there is a BIG difference! By creating a strong business with a replicable model and systems, you can hire quality people to carry out the task you would normally do. This allows you to own a business and spend minimal time on it, creating an amazing vehicle for passive income.
I hope these passive income suggestions have been helpful to you so far. Make sure you don’t miss the final post of this series for the last 6 ways to create passive income.
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Do any of these methods appeal to you? If you have any questions feel free to ask them in the comment section and I will be happy to talk more with you! Just click here to leave a comment.